Consider that a small business owner can potentially save $500 per employee
annually on HR.  I have seen PEO’s do just that for small business
owners.  How?  Easy…economies of scale.

It depends on frequency of payroll, quantity of checks being cut, how many locations your company requires checks to be delivered and what other services are being provided.  For instance, if you have a payroll provider that offers Sect 125, or a 401k, or pay-as-you-go workers compensation insurance, then you can expect to pay more.

The payroll part of the equation is the easy part…it is the additional services and convenience that providers make their margin.

1. Employee Benefits-  Lets face it, every year the cost of employee benefits get more and more expensive.  Due to economies of scale; HR Outsourcing firms are able to get much better pricing then you would typically be able to get on your own.  In addition; since the HR Outsourcing provider has highly trained experts to administer these benefits they typically only see single digit increases as opposed to the normal double digit increases you may see in the open market.  In addition; the HR provider is always looking for better options for their clients.
2. Worker’s Compensation-  Another reason many companies turn to HR Outsourcing services is for a lower cost, pay-as-you-go worker comp alernative with no up front deposits and no end of the year audits.  Yes you heard me right!  When you work with an HR Outsourcing firm you will no long have to pay up front Deposits in the tune of 20% down and you are not subjected to those awful year end audits where you are typically hit with a large premium adjustment for the previous year.  The reason for this is that you are paying for exactly what you use as you use it.  Actually you would pay for it after you use it, creating a shift of roughly 3 months in cash flow.  Also because you are paying for your comp on a weekly basis your worker’s comp bills are much smaller and more manageable.
3. State & Federal Compliance- with well over 85 state and federal compliance issues (depending on the state you live in), it is surprising any company is able to function without getting a fine or penalty.  By having certified HR professionals working with you, they will help you to stay out of trouble with both the state and the federal government.  In addition they will have their legal team address any HR related issues that may arise and protect you with EPLI (Employment Practices Liability Insurance).
4. Reduce labor cost- There are many hard costs associated with HR including Health, dental, vision, life, disbility, retirement, FICA, FUTA, SUTA, Payroll etc…  In addition there are many soft costs that many business owners do not consider but can not be ignored such as the time it takes the owner of the company or an employee of the company to handle HR related issues, premium increases due to poor benefit administration or poor risk management, fines and penalties caused due to noncompliance, increases in unemployment rates due to poor administration etc…  HR Outsourcing companies are able to reduces costs in both Hard and Soft costs- let us show you how!
5. Improved HR Technology-  Many companies realize that the cost associated with a powerful HRIS (Human Resource Information Software) are far to expensive to purchase on their own; especially after you consider annual maintenance fees and upgrade costs.  However the HR Outsourcing firms provide you with this technology at no extra cost!  It is actually part of their program for you to use.  No upfront costs to use the software, no annual maintenance fees and no upgrade costs.  In addition you will be assigned an IT Manager to train you and to answer any questions that you may have as you go.

1. Increases Productivity- By reducing the time that you and your employees have to spend on the administrative headaches associated with Human Resources; your staff is able to focus their attention on the more important Profit Centers which increase productivity and increase company net worth
2. Decrease Liability- By utilizing the services of professional  HR experts, your company will always be in compliance with all state and federal regulations.  In addition; your company will be covered  with EPLI (employment practices liability insurance) and the Outsourcing firms legal staff will be there to assist as well.
3. Attract & Retain Key Personnel- By gaining access to Fortune 500 level benefits such as Health, Dental, Vision, Life, Disability, 401k etc… at greatly discounted rates; your company will have the leg up on your competition by being able to not only attract key employees but to retain them for the long term.
4. Simplify-  Through the use of the HR providers powerful HRIS (Human Resource Information Software), your management team will have immediate access to important employee information (such as payroll information, vacation & sick time, employee files, employee reviews, benefit reports etc…) at their finger tips.  In addition; your employees will be able to log into print check stubs and W-2. review employee handbooks and safety manuals, review employee benefits and more.
5. Grow Your Business- focus on what you do best and forget the rest

Why?  Because a lot of companies are in the process of reviewing their core competencies and service providers and vendor relationships in the fourth quarter and like the idea of starting up a new relationship on January 1.  Nice and clean.  It is a reasonable request and makes sense, especially given some of the tax consequences with some hr outsourcing models. 

Executives across the country are asking themselves: “Where can I cut costs or improve our operations without bringing on more costs?”  One of the best ways for small to mid-sized businesses to improve their bottom line is to take a look at the one division within their company that brings in ZERO revenue.  Human Resources. 

Through an HR outsourcing solution, our clients have been able to save anywhere from $100 to $1,000 per employee per year in labor costs.  Sure, the services cost money, there is no free lunch.  However, the economies of scale that are gained by using shared services or an hr outsourcing company, save in the cost of benefits, workers compensation insurance and administrative time.

So, if you are a staffing company that wants to keep your labor costs low (workers comp, benefits, payroll) and your accounts receivables working for you, call or email us to discuss.

Or, if you are a payroll funding company or employee leasing company that wishes to join forces, call or email us.

Critical PEO Provisions Advance in New Hampshire

All good, but we still call it “employee leasing.”  Rome wasn’t built in a day.  Weirs Beach, maybe, but not Rome.

http://legislature.mi.gov/doc.aspx?mcl-338-3723-new

The old rule of thumb, as I was taught, was for every 50 employees, you need an HR pro on staff.  But, of course, that ratio becomes skewed as the company becomes larger.  In other words, a company with 2,000 employees certainly can do without 40 HR pro’s (imagine that labor costs…at an average salary of $50,000, plus taxes, benefits, etc…you are in the range of $2,500,000).  Jaw-dropping, I know.

More reasonable would be about 15 for a 2,000 employee group.  But how can a company get that number down further?  Outsourcing functions to a PEO (professional employer organization), ASO (administrative service organization) or BPO (business process outsourcing) can drastically reduce a company’s overhead in the HR department.  We have worked with companies that have anywhere from two to 5,000 employees and have been able to cut their HR department in half, or better, thus saving an average of $62,500 per employee, and set them up with a solution that costs substantially less.  Include in the savings an  industry leading HR software solution that integrates with critical core business software, and now we are talking about a savings in the millions of dollars. 

Sounds great, right?  You can save your 2,000 person company $1,000,000 annually with this type of solution.  Who’s against it?  Why HR pro’s, of course.  This means cutting down their little fifedom.  Any department within a company does not like to see its numbers erased.  But who better to be erased than a non-revenue generating unit like human resources. 

The answer to the question: How many HR professionals does it take to change a light bulb? 

1. One to write up a job description
2. One to hire the individual to change the bulb
3. One to explain the benefits the new employee is entitled
4. One to act as risk manager to be sure that all OSHA rules and regulations are followed and reported
5. One to write up the performance evaluation
6. One to lay off the employee
7. One to inform the employee of their ongoing benefits and access to COBRA, et cetera
8. One to manage the unemployment claims

Did I miss anything?

That’s eight (8), and that is only if everything goes right and the employee does not get injured in the process and you need to have another HR manager handle the workers comp claim and another to manage the “back-to-work” program.

Why not roll them up, get some economies of scale, tell Betty-Sue Badbenefits and Roy Shakeyriskmanagement to work in a department within the company that actually pulls in some revenue?